Cost of goods sold for Galaxy Manufacturers was $3,545,000 for the year. If the beginning inventory at cost was $950,250 and the ending inventory at cost was $735,875, find the inventory turnover at cost. (Round your answer to the nearest tenth)

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated as the cost of goods sold divided by the average inventory. Average inventory is the sum of beginning and ending inventory divided by 2. So, average inventory = ($950,250 + $735,875) / 2 = $1,693,062.5. Inventory turnover = $3,545,000 / $1,693,062.5 = 2.093, rounding to the nearest tenth gives 2.1, which is not an option provided, indicating a mistake in calculation or interpretation. Correctly recalculating: Inventory turnover = Cost of Goods Sold / Average Inventory = $3,545,000 / (($950,250 + $735,875) / 2) = $3,545,000 / $843,062.5 = 4.2 times.

Cost of Goods Sold for Galaxy Manufacturers Was $3,545,000 for the Year